Correlation Between Chunghwa Precision and Chi Sheng
Can any of the company-specific risk be diversified away by investing in both Chunghwa Precision and Chi Sheng at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Chunghwa Precision and Chi Sheng into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chunghwa Precision Test and Chi Sheng Chemical, you can compare the effects of market volatilities on Chunghwa Precision and Chi Sheng and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Chunghwa Precision with a short position of Chi Sheng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chunghwa Precision and Chi Sheng.
Diversification Opportunities for Chunghwa Precision and Chi Sheng
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chunghwa and Chi is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Chunghwa Precision Test and Chi Sheng Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chi Sheng Chemical and Chunghwa Precision is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Chunghwa Precision Test are associated (or correlated) with Chi Sheng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chi Sheng Chemical has no effect on the direction of Chunghwa Precision i.e., Chunghwa Precision and Chi Sheng go up and down completely randomly.
Pair Corralation between Chunghwa Precision and Chi Sheng
Assuming the 90 days trading horizon Chunghwa Precision Test is expected to generate 4.73 times more return on investment than Chi Sheng. However, Chunghwa Precision is 4.73 times more volatile than Chi Sheng Chemical. It trades about 0.33 of its potential returns per unit of risk. Chi Sheng Chemical is currently generating about 0.28 per unit of risk. If you would invest 54,700 in Chunghwa Precision Test on August 30, 2024 and sell it today you would earn a total of 15,400 from holding Chunghwa Precision Test or generate 28.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chunghwa Precision Test vs. Chi Sheng Chemical
Performance |
| Timeline |
| Chunghwa Precision Test |
| Chi Sheng Chemical |
Chunghwa Precision and Chi Sheng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chunghwa Precision and Chi Sheng
The main advantage of trading using opposite Chunghwa Precision and Chi Sheng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chunghwa Precision position performs unexpectedly, Chi Sheng can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Chi Sheng will offset losses from the drop in Chi Sheng's long position.| Chunghwa Precision vs. Pacific Construction Co | Chunghwa Precision vs. Adata Technology Co | Chunghwa Precision vs. Datavan International | Chunghwa Precision vs. New Asia Construction |
| Chi Sheng vs. Maxigen Biotech | Chi Sheng vs. Chunghwa Chemical Synthesis | Chi Sheng vs. Sinphar Pharmaceutical Co | Chi Sheng vs. ScinoPharm Taiwan |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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